here's why Bush's SS privatization plan is criminal:

[ithacan]

"Long before the economic blight of the depression descended on the Nation, millions of our people were living in wastelands of want and fear. Men and women too old and infirm to work either depended on those who had but little to share, or spent their remaining years within the walls of a poorhouse . . .The Social Security Act offers to all our citizens a workable and working method of meeting urgent present needs and of forestalling future need . . .

— President Franklin Roosevelt; August 14, 1938, radio address on the third anniversary of the Social Security Act

Social security is an insurance plan, for individuals, but also for the nation.

The radical Republicans are trying to shift the discourse, in order to line the pockets of the financial industry and to satisfy the blind ideology of the neoliberal extremists.

If Bush takes the White House he will destroy this insurance program, under the guise of "giving Americans the freedom to choose".

Let's think about whether that would make sense for car insurance or life insurance or health:

Instead of buying insurance (which basically amounts to a subsidy for those who died or have accidents), each person takes that money and invests it in the stock market; the proceeds then pay for what insurance claims would pay for. If the stock market has a bad day (or decade), you're out of luck. If your broker screws you over, you're out of luck. If you make bad decisions because you don't have the time or resources to research the market, you're out of luck. And you'll be living in the "wastelands of want and fear."

Clearly not a good idea in these cases.

Just as bad an idea for social security.

This is such an important issue, but given the extremism of the Bush gang on so many other issues, it's fallen off the radar screen.

Don't forget how much is at stake in this election.

[meti57b]

1. people have paid substantial amounts of their own money into the fund.

usually over their whole lifetime. bush is in the process of stealing that money.

[Penndems]

2. You know, Bob Dole was pushing this SS privatization crap

during the '96 campaign, which was one of the many reasons he lost.

Now, here's Junior, eight years later, peddling the same thing - same message, different messenger.

Why were people so concerned and outraged in '96, but not in 2004?

[REP]

3. Well...Do You Trust The Gov't Less Now Than in '96?

A LOT less?

Not that I think SS privatization is a good thing; I can just understand how people could get really, really nervous about SS now versus in '96.

[Penndems]

18. Most people trusted Bill Clinton more than Bob Dole in '96

in regards to protecting their Social Security accounts. YES - unfortunately I DON'T trust the government as much now as I did in 1996. Back then, we had somebody with a brain, compassion and a sense of what public service entailed occupying the Oval Office.

It was a risky prospect in 1996, when Dole advocated it. Why would anybody feel it's LESS risky now, in 2004? Because Junior, who poses himself as Jesus's brother, SAYS it's O.K.? Why would I (or anyone else, for that matter) want to put my Social Security into the stock market, and risk losing it to the volatility of Wall Street when/if the markets take a downturn and go "bear"?

Maybe I'm missing something here, but if it wasn't a good idea eight years ago, it STILL shouldn't be a good idea now.

[ikojo]

34. Big business has had eight years in which to mold the

message to fit the prevailing cultural attitude that what is mine is mine. The money paid into social security is framed as belonging to ME. If that money belongs to ME then I should have a say in how it is invested, so the message goes.

We have come a long way in the US where we cared about the well being of our neighbors. Sure when there is a catastrophe Americans are quick to donate food but when it comes to helping one another on the micro level, Americans are less willing. I think that is because we are all seen as being responsible for our actions and if we aren't doing well financially then surely it is our fault and not the fault of a system that takes from working people and funnels that money upward in the guise of tax breaks for the wealthy. No, it can't be that.

[lawladyprof]

4. Conventional advice three legged stool

SS, pension, and savings. Thus, you didn't have all your eggs in one basket (for the reasons you describe). Now, pensions have, in many instances, been replaced with market-based savings plans (401K's) and the privatization of SS threatens to make kick away the other leg (shorten?) by making it market-based to some extent.

To the folks that whine, "The market would do better, produce a better rate of return," I say you sacrifice some possibility of gains/higher returns for safety. You can make a fortune/realize a high rate of return if you are willing to take higher risks. Combine that with the insurance aspects of SS and you have what we have today. The way to make sure SS is there for you is a make more workers (small giggle) in the generation following yours.

[REP]

5. "Make More Workers"

That is why SS is basically an elaborate Ponzi scheme, and why people who opt out of overpopulating the planet and further draining scarce resources are screwed so hard by the system.

[ithacan]

6. it's an insurance program

and no more of a ponzi scheme than life insurance or health insurance...

The point about about diversifying retirement income is key.

Pensions used to be secure. Now they don't exist, replaced by forcing people to put money into the market.

Social security is secure. It goes against the most basic financial advise to force people to put it into the same markets their 401Ks are in.

The republicans are trying to force everyone to have to put money into the markets. Guess who benefits from that.

[REP]

9. I'm AGAINST Privatization!

I just don't think we can breed our way to solvency on it, as the post I responded to suggested. There are other ways to fund it or introduce more workers that does not mean "(giggle) making more workers" (hint: immigration).

[Lydia Leftcoast]

23. There is:

raise the amount on which SS tax is levied from $80,000 to some 6-digit number, perhaps $200,000. As it stands, some mid-level drone pays the same SS tax as his CEO.

SS is already solvent for the next thirty or forty years. Raising the upper limit on SS tax would basically keep it solvent forever.

[loudsue]

24. Very lucid argument, Lydia Leftcoast! I totally agree.

And it's a good way to pass along the SUCCESS from one generation to the next, not within just "a family", but "the family of citizens". Are we ALL PEOPLES OF ONE COUNTRY, or are we all a chaotic mixture of go-it-alone cowboys, each thinking we don't need anybody else?

The WORKERS are the ones that create the wealth in this country.... but under the present system, only their MANAGEMENT is allowed to profit from that wealth.

The paradigm shift of recent past decades, that says MANAGEMENT is somehow the VALUE, and that WORKERS are a disposable convenience, is what is driving this shift to totalitarian capitalism.

There needs to be a balance between socialism and capitalism for there to be a REALISTIC picture of what makes the world work for all.

:kick::kick::kick:

[Dunedain]

26. Good Point

I maxed out my SS a couple times during the 90's. For about 3 months out of those years, I received what amounted to an extra 7% every paycheck. It would probably boggle the mind to see the numbers of what a ceiling of 200k plus a year would do.

[SoCalDem]

31. NO upper limit..but a LOWER limit.. no SS on the first 20K

anyone living on 20K cannot AFFORD to have their share of FICA deducted.. The employer;'s share remains the same:)

and for the superrichies..lets include dividend INCOME..not just payroll income..

[MUSTANG_2004]

32. It would be nice to lower the cost as well

It would be interesting to see if raising that wage limit would also allow us to lower the rate. For the self-employed such as myself it's a steep 12.4% rate and then Medicare is another 2.9%.

An extremely regressive tax.

[Egalitariat]

10. It IS more of a Ponzi Scheme than insurance

Insurance companies that collect more premiums than they pay out will save and invest those surpluses.

SS has, and has had, surpluses every year for a long, long time. Those surpluses were immediately spent. Poof. Gone.

SS depends on a whole bunch of workers and just a few retirees. When that balance changes, the Ponzi Scheme goes bust.

This is why Al Gore's "lockbox" plan in 2000 was one of the smartest, most underrated, campaign promises in history. It would have forced "some" discipline on a spend-happy Congress.

[ithacan]

12. not a ponzi scheme, what you describe is outright theft!

if today's income from SS payments was all going out as benefits, it might be seen as ponzi scheme.

But that's not where the money is going. Workers are paying into the system more than is being payed out to retirees. The difference should be saved to fund future benefits. But the government is "borrowing" from the SS fund to give money to rich people in the form of tax refunds, etc.

Bush is STEALING from the social security fund, and then claiming there's no way social security will survive.

You're right about the "lock box" concept. That in fact is the basis of social security. But when you have people ideologically and financially committed to destroying social security controlling the "lock box", no surprise that they loot the box and hand out the hard-earned SS savings to their wealthy cronies.

[punpirate]

8. Only one problem with this philosophy...

... it doesn't work for the bottom 40% or so of the population, who can't afford to put any significant amount into private savings, and who often (and increasingly) have jobs which do not offer a guaranteed pension plan. SS becomes the primary mainstay in retirement for such people.

And, if the substantial increase in personal debt is any indication, the middle class is finding less and less money to put into savings.

This squeeze started under Reagan, and hasn't really let up. Personal savings actually went negative for a few quarters in the late `80s. I would expect the savings situation to considerably worsen with four more years of Bush, even if SS privatization doesn't come about.

[ithacan]

11. and what makes it worse

is that for those who struggle to put money into private savings, 401ks, etc. there is an expectation that they should have to raid them to pay for things like mortgages, kids' college education, health needs, etc.

What we need is to revert back to real guaranteed pension plans, not the BS that passes for "pensions", 401ks are VERY different from the kinds of pensions that my dad's generation got, and guarantee you absolutely nothing.

Thus the importance of social security as being there, being secure and guaranteed and NOT subject to market swings, etc.

[punpirate]

13. Unfortunately, the trend has been in the opposite direction...

... since companies now have the legal right to convert guaranteed pension plans to cash-balance plans, which transfers risk from the company to the individual; many companies are running for bankruptcy in order to shed themselves of obligations to retirees; many companies, in this very competitive job market are simply offering no pensions at all.

401ks remain a popular vehicle for only one reason--in the absence of any other pension plan, dropping a little money into a 401k is rather cheap for the company because they can hold the contributions for ninety days--it's like a free short-term loan every quarter. If there were legislation to reduce that period to, say, zero or a week, 401ks would dry up at an astonishing rate.

Consider that the average semi-skilled or skilled employment period in this country is less than the average time to vesting, and that pension benefits aren't carried from job to job as in Europe, I think any compromise of SS is going to have serious ramifications for the overall economic well-being of retirees fifteen to twenty years from now, and of the economy as a whole.

[ithacan]

15. the clear solution: tax corporations to fund retirement

if they are not going to respect their obligations, they should not be allowed to socialize the costs and privatize the benefits.

So, tax corporate profits in order to fund pensions, real guaranteed pensions, for all workers.

[punpirate]

17. Again, unfortunately, that's a trend...

... going in the wrong direction. Corporate share of tax revenues was about 35% in the `60s, while in the 2004 tax year, that share may be as little as 7-8%, given current trends.

If Bush remains in office, corporations likely will be paying no taxes at all by the end of his second term, which is the ultimate aim of the intense lobbying that's been going on for more than twenty years. Add in the increasing amount of direct subsidy of corporations--sending other tax dollars directly to them--tax revenues will begin to flow out to corporations, rather than the other way around.

Even now, the pension situation is critical. Many are covered by a government insurance program, and we may be putting huge sums of money into that plan just to keep retirees afloat (with corporations gaming that system in the same way that was done with government insurance of savings and loans).

The real key to what's going on is campaign finance corruption at all levels, combined with an ideology of corruption and crony capitalism masquerading as one promising cultural change for the masses.

No honest politician unencumbered by implicit or explicit obligations to corporations would endorse policies designed to destroy their constituency while favoring big business. And yet, that's what's happening. *sigh*

[antigop]

19. Nope. Sorry. Cash balance plans have been ruled illegal

>>
... since companies now have the legal right to convert guaranteed pension plans to cash-balance
>>

http://www.nynews.com/newsroom/080203/d01a02ibm.html

IBM employees sued and won.

>>
On Thursday, a federal judge ruled in favor of Cooper and 140,000 other IBMers in the United States who saw their pensions reduced by two rounds of changes the Armonk-based computer giant made in the 1990s.

The second, in 1999, switched many workers to cash-balance plans from traditional pension plans.

>>

Cash balance plans have been ruled illegal in the IBM case.

[punpirate]

20. Uh, not quite so clear-cut as that...

... read down here to a later Maryland decision:

http://www.uschamber.com/government/issues/socialsecurity/cashbalance.htm

For obvious reasons, business will continue to work toward such plans until they can be dispensed with entirely as current retirees under the plans pass away.

At any rate, the current legal status is not absolutely defined, and Congress will eventually find a way to enable the adoption of such plans or similar ones. The lobbying by the U.S. Chamber of Commerce and the National Association of Manufacturers has been pretty intense.

[antigop]

21. What part of "THE IBM EMPLOYEES WON" don't you understand?

They won their case.

Another four years of Bushco, and yes, cash balance plans WILL be legalized. Bush promised "pension reform" -- we all know what that means.

A vote for Bush is a vote for legalization of cash balance plans.

[punpirate]

22. If you will look at the two cases...

... you will note that the 2003 case against IBM was on the basis of the plan having an inherent age bias. The 2004 Maryland decision said that cash-balance pension plans were not inherently discriminatory on the basis of age.

When it comes to legal precedent, that muddies the waters. The IBM employees won, yes, but not what you think. They received a $320 million settlement for employees under an earlier interim pension-equity plan. The remaining two issues in the class-action suit were left unresolved by the settlement, one of which is whether or not cash-balance plans are discriminatory. Only if IBM loses its appeal will an additional amount be paid under the settlement agreement, and only then will the illegal status of cash-balance plans be defined. Even though the judge in the lower court ruled that cash-balance plans are discriminatory on the basis of age, that ruling was held in abeyance--as was the money owed to the retirees--pending appeal, as a condition of the settlement.

The IBM cash-balance issue is still in limbo, and there's another court ruling saying that the plans are not discriminatory. And, my original statement was that cash-balance plans were replacing traditional pension plans (more than a thousand corporations now use them). I stand by that--the Maryland ruling makes the legal status of the issue less clear-cut, which is what I said, I believe.

Cheers.

[antigop]

27. I know EXACTLY what the IBM employees got

Did the judge approve the $320 million settlement?

You said in your original post:

>>
since companies now have the legal right to convert guaranteed pension plans to cash-balance
>>

NOT TRUE. THEY DON'T. You are wrong.

In the IBM case, the judge ruled the cash balance plan is age-discriminatory and illegal, so don't give me your baloney. Read the ruling.

Also go read the IRS ruling from the Tax Court with Onan.

Your statement about cash balance plans replacing traditional pension plans is also baloney because you are falling right into the GOP and ERIC's trap. They want you to believe this baloney that this is the future.

It's only the future if employees don't stop this stuff.

A vote for Bush and the GOP is a vote for cash balance legalization.

The only way to stop this baloney is to vote out the GOP and Bush.

[antigop]

28. and the Bush Treasury has tried TWICE to legalize this stuff

through Treasury regulations.

Another reason to vote out Bush -- to get some new appointments to the Treasury.

[punpirate]

29. You seem to be under some...

... misapprehension. I'm not in favor of cash-balance plans, nor am I "falling right into the GOP's trap."

I'm simply trying to explain that the movement to them is pervasive, and the business community will continue to attempt to undo a traditional pension plan system. As well, the legal issues are not as solid as you seem to think. Beyond that, Congress has been a very good friend to business in the recent years, and I don't expect that to change on a dime, whether Bush is in office or not.

Here's the analysis of the IBM ruling by David Cay Johnston, which mirrors what I've described. Please note that it is dated Sept. 30, 2004:

http://www.nytimes.com/2004/09/30/technology/30pension.html

Please note, as well, this part of the above article:

"Because of uncertainty about their legality, conversions to cash-balance plans have stopped for now. If I.B.M. wins its appeal, many more companies are expected to adopt cash-balance plans because they are generally less costly than traditional plans."


You seem to think that anyone describing an undesirable situation is therefore in favor of that situation. If you will read through the posts, you'll discover that I am not. I am saying that it has been and will continue to be a trend, if the courts side with IBM on appeal. And, whether you like it or not, many plans have been already converted to cash-balance--simply because they cost corporations less money. In 1988, there were fewer than 50 such plans. By the time the IBM suit began, there were over a thousand. The largest portion of companies with such plans have not converted back to defined-benefits plans in the face of the court rulings you cite.

As for the Onan decision, companies' lawyers have continued to argue that the Tax Court decision against Onan represented a special case, simply because of the way Onan had structured its retirement plan--it mixed three different sets of standards for calculating rates of accrual and repayment, creating three different "classes" of employee. Legally, they argue, the 1999 tax court ruling against Onan was specific to Onan's plan, and does not apply to all cash-balance plans.

And, that's the nature of the legal system. And, this appeal by IBM has created some legal uncertainty.

So far, individual groups of employees have obtained some relief by suit. But, as the article suggests, Congress will have to rewrite pension law to exclude age-discriminatory plans such as cash-balance plans, which they have not yet done (bills introduced, but none passed, as far as I know). Until such legislation is passed, employees of other corporations now under cash-balance plans will be required to sue their employers for relief on a company-by-company basis.

The real answer is for Congress to pass bulletproof legislation preventing age-discrimination in pensions, which would eliminate cash-balance plans or ones similar in practical terms. That has not yet happened.

In fact, quite the reverse has occurred--the trend, especially in the last few years, is to generally push more risk onto the individual, as I have said, and this will have economic consequences in the next few years, as I have also said. Stating the obvious does not mean I approve of that trend, or that I have been suckered into believing it should be so.

Cheers.

[SoCalDem]

30. That stool has only ONE leg..

Most people since the 70's have seen their pensions go "poof"( and very few jobs come WITH pensions at all..most want to use 401-k, which depend on the stock market.)..

When you barely have enough to LIVE on, and pay an arm and a leg for medical insurance, there is not much left TO save..

[Dez]

7. Social Security privatization

God forbid Bush steals the election again. I fear what will happen if that happens. He wants to ruin Social Security for his buddies who will make big bucks off of privatization. This man is motivated by money, nothing else. He has no compassion for those who have less than millions..

Dez

[idiosyncratic]

25. Welcome to DU!

:hi:

[leftchick]

14. Know Your Enemies: Grover Norquist, the man behind the curtain

This man probably, more than most in the bush administration, scares the crap out of me. We can not afford ANY more years of his ideology....


The Soul of the New Machine

~snip~
Few in American politics are as blunt about their plans. "If the American people really want to know what George W. Bush is up to, the best place to look is the candor of Grover Norquist," says Ralph G. Neas, president of People for the American Way. Norquist is not above equating tax collection with a street mugging, or suggesting that arguments for higher taxes on rich people echo the ones Nazis used to justify their targeting of Jews. "Bipartisanship is another name for date rape," he told a reporter in May, borrowing a phrase from former House Majority Leader Dick Armey. He likes to say he wants to shrink the size of government in half over the next 25 years "to get it down to the size where we can drown it in the bathtub."

These are not the musings of an ideological fringe. Norquist has already secured written promises never to raise taxes from a majority of federally elected Republicans: 217 House members, 42 senators, and the sitting president of the United States. In 36 state capitals across the country, he is organizing weekly meetings modeled on his Washington coalition, and more than 1,200 state legislators and 10 governors have taken his anti-tax pledge.

~snip~
In 1998, as the Bush camp was plotting its run for the White House, Karl Rove sought out Norquist's support. At Rove's request, Norquist traveled to Austin for a private meeting with the then Texas governor and presented the agenda he wanted George W. Bush to back: broad income-tax cuts, school choice, the privatization of Social Security, tort reform, and free trade. Bush won Norquist over, and with Norquist's endorsement, the Republican base soon got on board. "The president and Rove understood the coalition and deliberately placed themselves inside it," Norquist says now. "That's why they won and McCain lost."



much more....
http://www.motherjones.com/news/feature/2004/01/12_402.html

[radwriter0555]

16. one word: SILVERADO... Identical schemes were in on that one too..

and if you don't know your history on Silverado, google Sliverado+Neil Bush...

Quite a profitable venture.

[Bullshot]

33. Privatizing Social Security would put the program in the same boat as

those whose 401-K's and other stock investments were crashed thanks to the Enron and other similar debacles. As long as there is lust for money and the wherewithal to circumvent the law, there will be another Enron-type crash in the future.